Business Broker
A professional intermediary who facilitates the sale of small businesses, typically earning 8-12% commission on completed transactions.
A business broker is a licensed professional who facilitates the buying and selling of small businesses, acting as an intermediary between sellers and buyers.
What Business Brokers Do
For Sellers:
- Value the business
- Prepare marketing materials (CIM)
- Screen and qualify buyers
- Facilitate negotiations
- Manage due diligence process
- Coordinate closing
For Buyers:
- Access to deal flow
- Screening and matching
- Negotiation support
- Process management
Broker Commission Structure
| Deal Size | Typical Commission |
|---|---|
| <$500K | 10-12% |
| $500K-$1M | 10% |
| $1M-$5M | 8-10% |
| $5M-$10M | 6-8% |
| >$10M | 4-6% (investment bank) |
Commission is typically paid by the seller.
Finding Quality Brokers
Good signs:
- Industry specialization
- Verifiable track record
- Professional certifications (CBI, M&AMI)
- Clear process and timeline
- Transparent about challenges
Red flags:
- Pressure to sign exclusive quickly
- Unrealistic valuations
- Vague about recent deals
- Poor communication
Related Terms
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